Thursday, June 11, 2009

U.S. Venture Capital Industry Should Shrink, Says Study

In a study released Wednesday by the Ewing Marion Kauffman Foundation, concludes that the U.S. venture capital industry needs to shrink, in order to revive the fortunes of the industry. The study, "Right-Sizing the U.S. Venture Capital Industry," the nonprofit foundation, concluded that there has been stagnating and declining returns in the industry due to rapid expansion of venture capital assets under management. The study was authored by Paul Kedrosky, a Senior Fellow at the foundation. According to the study, the decrease in venture capital returns predated the economic downturn, are due to the "rapid expansion" of venture capital assets under management in the late 1990's, and are making the segement "uncompetitive" as an asset class.